United States v. Liss ( 1943 )

L. HAND, Circuit Judge.

The defendants appeal from judgments of conviction under an indictment charging them with a conspiracy to violate the laws regulating the sale and dispensing of narcotic drugs. Liss and Conte were the prime actors throughout all the events laid in the indictment. In the first two of three phases they confederated with Rudy; later the venture took on an entirely different character, and Rudy dropped out. The other defendants had various parts in the scheme, and, as will appear, some of them were not shown to have been connected with it at all. Londoner and Palmer, who went by the name of the Leading Drug Company, were manufacturing chemists. Al N. Fox and Max Fox were jobbers, trading as the Recro Drug Corporation. The other defendants were drug and chemical retailers within the larger City of New York. All the defendants complain of various errors committed during the course of the trial, but the chief objection common to all is that the conspiracy embraced several different crimes which should not have been tried as one. These supposed errors, coupled with the failure to connect a number of the individual accused, are the points to be considered. The evidence introduced permitted a jury to find the following facts.

Late in 1939 and early in 1940, Liss, Conte and Rudy concocted a plan to produce synthetic morphine. They equipped a laboratory in North Bergen, New Jersey, and procured the assistance of a chemist named Jackson; but their efforts were fruitless; and this first phase may be disregarded, because, as the judge charged, there was nothing criminal in the enterprise anyway, for the statute did not regulate dealing in anything but derivatives of opium and coca leaves. After discovering that synthetic opium could not be made, the three consulted further with Jackson as to the possibility of extracting opium from such substances as paregoric, “Stroke’s Mixture” — a cough medicine — -and lead and opium wash: all being “preparations of limited narcotic content,” which may lawfully be sold at large, though under certain statutory regulations. These experiments also failed and were abandoned. Rudy dropped out altogether at that stage; he did not appear in any of the subsequent dealings of Liss and Conte with the others, and none of these ever had anything to do with the “paregoric conspiracy,” as it may be called. That ended not later than April, 1940, and at about the same time Liss began buying lead and opium wash. It does not definitely appear just what his purpose was: the theory of the prosecution appears to have been that he and Conte meant indirectly to buy the wash in quantity from Londoner’s company and to return it circuitously to Londoner, who should sell it again. The wash would thus create a kind of revolving fund, the same parcels appearing as a series of sales -of different parcels on Londoner’s books, which should justify large purchases of free opium by him as an ingredient. This free opium Londoner would then dispose of to Liss and Conte illicitly; and they would sell to addicts. If such was the plan, it was never proved; and the prosecution does not now seek to maintain the conviction on that theory. What it does assert is that it proved a conspiracy to violate the regulations governing the sale of “preparations of limited narcotic content.” § 2551(a), Title 26 U.S.C.A. Int.Rev.Code. That section relieves such preparations from the ordinary regulations for the sale of preparations of opium, but only upon several conditions: first, they shall be dispensed only “as medicines”; second, a record shall be kept of all sales for two years; third, every person dispensing the “preparations” shall register as required in § 3221, and shall pay a special tax of $1.00 a year. Finally, Article 183 of Regulations 5, provides that although orders for such preparations need not be on any particular form, if they are “from a dealer” (that is, not a consumer), they must bear the registty number of the dealer who gives the order. (All dealers must have such numbers.)

Whatever his purpose, Liss began in April, 1940, and continued for about six months, to buy inordinately large quantities of lead and opium wash. Among those to whom he went in April, was Londoner, whom he asked to sell him for his own resale to the owners of race horses, who used it, he said, to medicate the horses’ legs. Londoner told him that he could not sell for such purposes because Liss had no registry number, as he would not be selling to him as a consumer; but he suggested that Liss should buy of retailers and jobbers to whom he (Londoner) would sell; and Liss’s extremely large purchases were made in that way. Among the retailers to whom Londoner sold were: Cohen and Geffner, who used the name of Huel’s Chemists, Inc.; Lowenstein and Jaffe, who used the name, Broed Pharmacy; Mainella, who traded under his own name; and two others who turned state’s evidence: Frankel and Garfinkle. Liss bought of all these retailers, and Conte went about and picked up the goods.

The first question is as to combining in one indictment and as a single conspiracy two separate conspiracies: the “paregoric” and the “lead wash.” These were separate not only in personnel but in content. The only confederates in the “paregoric conspiracy” were Liss, Conte and Rudy; in the “lead wash conspiracy,” Liss, Conte and the druggists. The content of the two was altogether different. The “paregoric conspiracy” was to extract opium from “preparations of limited narcotic content”; the “lead wash conspiracy” was to allow Liss and Conte to procure “lead wash” for use not “as medicine,” and for resale contrary to the regulations. Even had the prosecution succeeded in establishing the theory of a “revolving fund,” the content of the second conspiracy would have been as different as possible from the first. There was therefore a variance between allegation and proof,'and while that is not fatal of itself (Berger v. United States, 295 U.S. 78, 55 S.Ct. 629, 79 L.Ed. 1314), it is not necessarily harmless. The question is like that of joining separate crimes in separate counts of a single indictment, or of consolidating separate indictments for trial; the propriety of either depends upon the danger they create that the jury may confuse the issues. United States v. Lotsch, 2 Cir., 102 F.2d 35; United States v. Smith, 2 Cir., 112 F.2d 83, 85; United States v. Perlstein, 3 Cir., 120 F.2d 276, 281; Firotto v. United States, 8 Cir., 124 F.2d 532, 535.

In such situations it is always possible that a jury may use evidence which connects an accused with another crime, not only as proof of the crime charged against him, but — when there are several accused — as proof of the crime charged against the others. The first danger is greater than the second; and the fusing of the two conspiracies into one was therefore more serious against Liss and Conte — the only two of the accused who were confederates common to both conspiracies — than to Rudy or to the druggists. There - was therefore a not wholly imaginary danger that the jury might use the evidence against them cumulatively to prove both charges. If however the conspiracies had been separated into two counts or two indictments it does not seem to us that it would have been improper to try Liss and Conte upon both charges at the same time. The joinder section (§ '557, Title 18 U.S.C.A.), allows the joining of “acts or transactions of the same class of crimes,” and that presupposes that the transactions may be quite independent of each other. True, the transactions must always be such as may be “properly joined,” but that only means that the likelihood that the evidence will be misapplied is not serious practically. The mere fact that the accused are different in two counts is no longer important, despite what was said in McElroy v. United States, 164 U.S. 76, 80, 17 S.Ct. 31, 41 L.Ed. 355; United States v. Smith, supra, 112 F.2d 83, 85; Firotto v. United States, supra, 124 F.2d 532, 535; Morris v. United States, 5 Cir., 128 F.2d 912, 917. Here it would have been competent upon a trial of Liss and Conte upon the “lead wash conspiracy” alone to prove that they had previously tried to extract opium out of paregoric. Their guilt in the “lead wash conspiracy” depended in part upon whether their enormous purchases of “lead wash” were "as medicine,” and it was competent on the issue of their intent to show that they had had a criminal intent on earlier occasions. Hence they have no just complaint of the variance.

As to Rudy the only question that can arise is whether he could have been prejudiced by showing that Liss and Conte, accused as his confederates in the first conspiracy, had gone on to commit a kindred crime with the druggists. If he was prejudiced it could only be because the jury reasoned that the corroboration of the guilty disposition of Liss and Conte made it more probable that there had been a “paregoric conspiracy” and that’Rudy was a confederate in it. They may of course have so reasoned, but to assume so is really to deny them the most rudimentary power of discrimination, and, consistently, would make difficult any trial in which the number of accused was large. The chance seems to us too remote unless all joinders are to be forbidden. Obviously there was no possible danger to the druggists in the evidence connecting Rudy with the “paregoric conspiracy”; but the same question as arises in Rudy’s case does arise as to them from the evidence of Liss’s and Conte’s involvement in that conspiracy. Because these two had been engaged in an earlier illicit enterprise, the jury may have assumed that the druggists must have known that they were in an illicit enterprise when they bought the “lead wash.” In short, they may have imputed to the druggists the mens rea of Liss and Conte. That question seems to us no different from the one we have just discussed; if we are to clutch at such shadows, the criminal prosecution of complicated crime becomes impossible, and the phantom of the innocent man convicted will prevent any effective enforcement of the law. For these reasons we think that the variance was immaterial.

The next objection common to a number of the accused is the judge’s bias against them. It may perhaps have been true that at times his manner was not as urbane as could have been wished, and counsel may have occasionally smarted under his admonitions; but we can find no evidence that he improperly cut short their examination, and certainly none whatever that he expressed even indirectly any opinion as to the guilt of the accused. In a trial which lasts for eight court days, and in which there are so many accused, a judge’s serenity is often unduly tried by the persistence of counsel; no doubt perfection should be the standard, but if we were to insist upon it, few convictions could survive. More plausible is the complaint that the colloquial charge did not adequately inform the jury of the issues they had to decide. This was not so important as to the “paregoric conspiracy,” because the evidence as to that was simple, and the issue itself unmistakable; but the same was not true of the “lead wash conspiracy.” There being not enough evidence to support a verdict on the theory that the “lead wash” was being circulated back to Londoner, the only conspiracy of which the jury could find the druggists guilty was that they were all in a venture to supply Liss and Conte with the wash, knowing that they meant to resell it, or that it was not to be used “as medicine,” or that no record should be kept of the sales, or all of these things. The charge did not tell the jury that these were the issues for them to decide; the judge merely read them the relevant sections from the statute and the regulations; and the wilderness of the resulting verbiage must have left them pretty much in the dark. It did help a little that at the end he said that the question was whether the accused were “buying and selling this lead and opium wash in a legitimate way through legitimate channels in the ordinary course of business”; but even that was scarcely an adequate description of the prescribed formalities which they were charged with having conspired to evade.

None of the accused excepted to the charge, but some did request instructions, which the judge refused because they were not handed to him before all the counsel had summed up. This refusal was not however important except in the case of one request, for all the others added nothing of importance to the colloquial charge and might properly have been refused. The exception was Rudy’s request that the jury be told that he had had no connection with the “lead wash conspiracy.” That would certainly have, been a desirable makeweight against possible confusion from the joinder of the two conspiracies; and we shall count the refusal as an error. No question arises more often in criminal appeals than whether an error should result in reversal; formerly — acknowledging that it is theoretically impossible to fathom the jurors’ minds — it was the practice to give the accused the benefit of every intendment; and indeed the modern disposition to assume that an error has been harmless cannot rest upon any unsparing logical analysis. Perhaps all that a court should ever say is that a remote chance of prejudice should not balance the extreme probability that the jury came to the right result. A majority of us think that that was the case here. Rudy’s name did not occur anywhere in the testimony about thé “lead wash conspiracy”; his share with the “paregoric conspiracy” had been altogether in New Jersey, although he had been in New York once' while he and Liss and Conte were •trying to make synthetic morphine. If he suffered any prejudice it was in the joinder, not in the refusal of this request; and, as •we have said, the joinder was far more likely to have prejudiced Liss and Conte than him.

There remains therefore only the question as to the adequacy of the evidence. Nothing need be said of the guilt of Liss, Conte and Rudy as to the “paregoric conspiracy”: Jackson’s testimony was direct, and the jury might believe it or not as they chose. The same is true of Liss’s and Conte’s connection with the “lead wash conspiracy.” In the first place the jury might well have disbelieved the explanation that they wished to use it as a medicament for horses’ legs; indeed, taken in connection with their earlier activities this was patently a fabrication. Again as to Londoner, although he knew nothing of- the “paregoric conspiracy,” he sold over six times as much of the wash in 1940 as he had in 1939, and all of it went to Liss. It was Londoner also who induced the Foxes to make sham sales to retailers, who were to take back the goods, some of which eventually reached the hands of Cohen and Mainella, both purveyors to Liss. Finally, Londoner’s very reason for refusing to sell to Liss proved that his later indirect sales to him through retailers were illicit; for he knew that Liss had no right to buy at all, if he was to resell to racing owners. Liss, Conte and Londoner were the chief actors in this enterprise; there is not the least doubt of their guilt. The evidence as to the others we will now consider separately.

Palmer was the owner of more shares of the Leading Drug Company than Londoner, but the evidence goes no further than' to • show that he helped move some cases of the • “wash”; and ordered all the .opium. There was really nothing against him but the amount of the opium ordered; and it does not appear that he knew that it was all to be made into “wash” and go to.Liss. It is extremely likely that he was in fact privy to the conspiracy, but the proof seems to us lacking. He and Londoner kept proper records of the sale of “preparations of limited narcotic content.”

Cohen sold very large quantities of wash to Liss and, after what the jury might have thought an initial evasion, said that Liss had told him that he was reselling the wash on race-tracks; if so, that in itself was a crime for he then knew that Liss was not a consumer. He kept no records of sales of “preparations of limited narcotic content.” Geffner got all the profits of the sales and kept whatever records there were, if any. He was aware that some of the “wash” had been delivered at the store and took part of it to the cellar; and he deceived the narcotic agent who inquired how.much “wash” the corporation had dealt in; and Cohen swore that they discussed whether the sales were lawful. Nevertheless Geffner apparently had no direct dealings with Liss, and my brothers think that the evidence is not direct enough to hold him.

Mainella sold large quantities — 650 gallons — to Liss who told him the race track story; he kept no record of his sales and was by his own statement “worried” over the quantities ordered. A Providence druggist who had sold to Liss, delivered two separate consignments of 100 gallons each at his store, and it is most unlikely that the second parcel at least could have been put there without Mainella’s consent. He told a narcotic agent that these had' only been “dropped off in the alley in the rear of my store”; but certainly a jury might have found that he would have taken some action to prevent any second parcel, if the first had been delivered without his consent. After he finally became too frightened, he recommended Liss to Lowenstein; then at least he must have been aware that the dealings were illicit.

As we have just said, Lowenstein was Mainella’s successor with Liss, with whom he dealt directly, though his sales were only in the neighborhood of 100 gallons and there is no evidence that he knew of the story about the race horses. He was however at one time troubled about the legality of the sales, for he says- that he consulted a jobber with whom he dealt; and he well might have been troubled, considering the curious way in which the business came to him. Why Mainella should have turned it over to him nowhere appears; there seems to us a fair inference that he must have at least suspected, in view of the highly regulated character oi the industry, that there was som/fething unlawful about it. We are disposed to think that this was enough to support a verdict. There would certainly have been enough if a talk between him and Liss could be dated in which Liss showed consciousness of guilt, but it does not appear that this took place until after his connection had ended. The evidence against his partner Jaffe was too weak to sustain a conviction.

It is clear that the two Foxes were engaged with Londoner in illicit trading. By the arrangement of which we have already spoken Londoner sold wash to them which they in turn sold to retailers who got a bonus, often very large, and who then returned the purchases to the Foxes. Clearly these sales were not “as medicine,” and some of the returned wash they sold to Cohen and to Mainella, though it does not appear whether any of it ever reached Liss. Nor is there any evidence that the Foxes ever had any dealings with Liss or that they knew him in the transaction. Nevertheless, it was certainly permissible for a jury to conclude from their bizarre transactions, all set on foot by Londoner, that they knew that the sales were part of some kind of illicit traffic. The wash was an opiate derivative, the sales of which were regulated; the regulations were being violated by a transparent disguise and at the instigation of the producer. The venture was not to have its conclusion upon return of the goods which in fact went to two of those .who we know were purveyors to Liss. It was not necessary that they should have dealt with Liss, or even have known him in the transactions; all that was necessary was that they should be engaged in a scheme which involved the disposition of the wash in violation of the statute and regulation, and that that scheme was the one charged in the indictment. The evidence justified that conclusion.

The case of United States v. Falcone, 311 U.S. 205, 61 S.Ct. 204, 85 L.Ed. 128, on which the druggists rely was quite different. The question there was whether the accused were parties to a conspiracy to make illicit alcohol; and it was held that it was not enough to show that they knew that the purchasers of the sugar which they sold would use it for that purpose. Here the conspiracy was to evade the statute and regulation surrounding the sale of “preparations of limited narcotic content”; and these were in substance three: (1) That the “preparations” must be sold “as medicine”; (2) that they must be sold either to a consumer, or a registered dealer; (3.) that the sales should be properly recorded. So far as the accused conspired to evade any one or all of these regulations, they conspired to commit a crime. ;It- is true; that the first of these .crimes demanded knowledge by the druggists of Liss’s purpose not to use the wash “as medicine,”' but it demanded no mor.e than a sale with such knowledge; it did not demand that the-druggists should be parties to any further crime: e.g., to Liss’s unlawful use of the wash after he got it. Again, there may be doubt whether the evidence proved that the conspiracy contemplated that the sales should not be recorded; but that was not necessary for there was ample evidence that it contemplated the other two crimes.

Convictions of Palmer, Geffner and Jaffe reversed.

Convictions of the other appellants affirmed.